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Friday, December 27, 2013

Charitable Giving Recommendations

December 26, 2013

So you've finally given all your Hanukkah and Christmas gifts to friends and family. But have you done your part for charity yet? Don't worry, if not; Americans as a whole tend to procrastinate on this front. Last year, 17.69 percent of the year's total charitable gifts were given in December, as well as 22.4 percent of all online gifts, according to theBlackbaud Index of Charitable Giving. So if you are still looking for causes to support, here are a few tips for how to spend your charitable dollar well.

Consult charity recommenders

Life is busy, and figuring out which of the thousands of nonprofits to which you could donate is most deserving of your support is a pretty herculean undertaking. So instead of trying to do all the necessary research yourself, check in with one of the several methodologically rigorous charity recommenders that have popped up in recent years. The best-known of these is GiveWell, which I rely on for my own giving decisions, butGiving What We Can, The Life You Can Save and AidGrade are great resources as well.

GiveWell recommends three top charities, Giving What We Can recommends four (two of which are also recommended by GiveWell), and The Life You Can Save recommends 13 (including the five groups GiveWell and Giving What We Can recommend). Here are the five groups recommended by GiveWell and/or Giving What We Can, and what they do:

1. GiveDirectly is #2 on The Life You Can Save's list and is also one of GiveWell's top-rated groups; Giving What We Can does not recommend it. The group's approach is dead simple: You give it money, and it gives that money to poor people in Kenya and Uganda, using the M-PESA cellphone payment system. Direct cash grants to households have, so far, made up 87.1 percent of GiveDirectly's total costs, making it a remarkably efficient operation. A randomized controlled trial of GiveDirectly found that the cash grants generated a variety of benefits for the households receiving them, such as an increase in food consumption and reduction in hunger, increased possession of assets like iron roofs and livestock, improved psychological well-being, and no noticeable increase in alcohol, tobacco or gambling spending. From now until Jan. 31, GoodVentures (the foundation of Facebook co-founder Dustin Moskovitz and his wife Cari Tuna, which has close ties to GiveWell) is matching donations to GiveDirectly, up to $100,000 per donor and up to $5 million total, so now is a particularly good time to give.

2. The Schistosomiasis Control Initiative (SCI) and 3. the Deworm the World initiative are both recommended by GiveWell, Giving What We Can, and The Life You Can Save. Both groups treat people (primarily children) afflicted with what are known as neglected tropical diseases (NTDs) in developing countries; SCI works in sub-Saharan Africa while Deworm the World works in Kenya and India. NTDs are a set of parasitic and bacterial infections afflicting over 1 billion people (90 percent of whom live in Africa). These diseases have been basically eliminated in rich countries, but persist in developing nations, especially those without reliable access to safe water and sanitation. They are neglected both because of their non-existence in rich countries and because they're generally not fatal, instead causing various deformities, blindness, pain, fatigue and other chronic conditions which greatly burden those suffering from them and impose significant economic costs on developing nations. Treating NTDs only costs about $0.50 per person, and treatments have been found to reduce school absenteeism and increase treated children's earnings as adults.

4. The Against Malaria Foundation is recommended by Giving What We Can and The Life You Can Save; while it was GiveWell's top charity last year, it has lost that designation because it has yet to commit $10.6 million in donations to distributing insecticidal bednets (the organization's main activity); GiveWell still considers it a worthwhile organization, but doubts the room that exists for additional funding. Insecticidal bednets generally cost less than $10 each to purchase and distribute, and are a highly effective means of preventing malaria infection and, thus, saving lives. In fact, GiveWell's best estimate is that the marginal cost of saving a life through bednets is about $3,216; these kinds of figures are next to impossible to nail down precisely, but suffice it to say it's a very cost-effective intervention.

5. Project Healthy Children is recommended by Giving What We Can and The Life You Can Save, but not by GiveWell. It sends experts to developing countries to assist in the fortification of staple foods like wheat and maize flour, sugar and oil with micronutrients like iron, vitamin A, iodine, zinc and folic acid. Micronutrient fortification typically costs under $0.30 a year per person, and can prevent a variety of micronutrient deficiency-associated maladies, including blindness (often caused by vitamin A deficiency), severe mental impairment (to which iodine deficiency can lead), and death in childbirth (of which iron deficiency is the leading cause).

Give abroad

A woman suffering from malaria rests on a bed in a hospital in El Sereif village, North Darfur, Sudan. (Albert Gonzalez Farran/UNAMID via AP)

All five of the above charities focus on fighting poverty and poverty-related diseases in developing countries, many in sub-Saharan Africa. None work on reducing poverty or fighting disease in the United States. That's not because fighting poverty, hunger, homelessness and disease in the U.S. isn't worthwhile, of course. But if you're looking to do the most good for your charitable buck, it's going to be hard to do that in the U.S.

Look at it this way. Shockingly, there are still people living on less than $2 a day in the United States, as Harvard's Kathryn Edin and Michigan's Luke Shaefer havedocumented. Some 1.65 million households with children live on less than a dollar per day per person, and things such as food stamps and refundable tax credits cut that to 613,000. Still, that's millions of people in extreme poverty, and their ranks grew significantly from 1996 to 2011. Globally, however, in 2010, around 2.4 billionpeople lived on less than $2 a day. Even if we eliminated extreme poverty entirely in the U.S. — and we should — that wouldn't make much of a dent in the problem globally. So if you're interested in fighting extreme poverty and related problems, looking abroad makes sense.

In his recent book "Reinventing Philanthropy" (excerpted here), Eric Friedman makes a comparison that illustrates this point particularly well. St. Jude Children’s Research Hospital in Memphis spends nearly $1.8 million treating about 260 patients every day, in addition to its research work. Children at St. Jude enjoy cutting-edge treatments for cancer and other terminal diseases. Contrast their situation with that of Domingos Antonic, an 8-month-old malaria patient at Malanje Provincial Hospital in Malanje, Angola. A $10 insecticidal bednet would have prevented his infection, but the hospital only received a quarter of the bednets it needed to cover the region. Once he was sick, Domingos needed a transfusion, but his veins were tiny, there wasn't a surgeon around to cut to fine one, and the non-surgical staff couldn't do the job. He needed oxygen, but the hospital didn't have an oxygen tank. So Domingos died. In an ideal world, of course, both Malanje Provincial Hospital and St. Jude would be fully funded. But in this world, it's clear that Malanje needs the money more, and could do more good with it.

GiveWell actually evaluated a number of causes in the U.S. to see if they deserved recommending, and found a few really worthwhile ones, including the KIPP chain of charter schools, the Nurse-Family Partnership and The HOPE Program, which places New Yorkers in extreme poverty in jobs. Even those highly effective programs fall shortwhen compared to highly effective interventions in developing countries, such as bednet distribution by the Against Malaria Foundation:

Again, this isn't to say that it isn't good to donate to U.S. groups. Food pantries, homeless shelters, mentoring programs and the like all do great work, and we'd be much worse off if their funding dried up. But if your interest is in saving the most lives or preventing the most suffering or otherwise doing the most good for your dollar, you'd be best off donating abroad.

One of the many tough things about evaluating charities like this is that agreeing on a metric of success is next to impossible. Is it "lives saved"? Then groups like SCI and Deworm the World, which fight diseases that are typically non-lethal but very debilitating, fall short. What about maximizing quality-adjusted or disability-adjusted life years (QALYs/DALYs), then? That leaves out valuable outcomes like improvements in schooling, earnings, asset-building and subjective well-being.

So it's worth considering leaving the choice of whether your dollar is spent improving health, extending life, increasing education, etc. up to the person receiving it. I am very lucky to have never experienced poverty, extreme or otherwise, in my life, and one consequence of that is that I have no idea what I should be spending my money on were I were living on less than $2 a day in Uganda. The people to whom GiveDirectly is sending money know if it's better to spend an extra dollar on an iron roof or on school tuition for their kids or on livestock. This is borne out both in the recent randomized evaluation of GiveDirectly and in the voluminousliterature on cash transfers (unconditional and conditional) more generally.

Obviously, like anyone, they aren't perfectly rational or perfectly informed, and there are some things (like bednets) that are under-purchased when they're not provided free of charge. But that should only count against giving them money directly if you're confident that you — or the charity to which you're giving — are significantly morerational and/or informed than the people receiving your help. If you aren't confident of that (and I'm not), then letting recipients choose for themselves how to spend the money may make more sense.

The World Bank's Jishnu Das makes this point particularly well: "'Does giving cash work well' is a well-defined question only if you are willing to say that 'well' is something that WE, the donors, want to define for families whom we have never met and whose living circumstances we have probably never spent a day, let alone a lifetime, in."

Dylan Matthewscovers taxes, poverty, campaign finance, higher education, and all things data. He has also written for The New Republic, Salon, Slate, and The American Prospect. Follow him on Twitter here. Email him here.